Step 9 doesn't work because it introduces a third person, and so fails to demonstrate S(2)
Isn't it Step 4, which uses as a premise what the whole thing is supposed to prove? "in every group of k people, everyone has the same age" You can't use your conclusion in your assumption!
In short: You fix k and assume that S(k) holds. If you can show that this always implies that S(k+1) holds, all you need is a base case (e.g. S(1) being true) to "recursively" prove that S(n) holds for all n >= 1 (or whatever your base case was).
Here the fault is that the induction step (proving S(k+1) from S(k)) requires k >= 2 but only specifically S(1) was proven.